Jefferson says Fed will let data drive next rate move, in no rush
Traders have cut the odds of an October rate rise to 50-50 from 70% after remarks from New York Fed President John Williams.
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UpdateThursday, October 1, 2026 at 4:10 PM ET
New jobless claims data released alongside the comments showed claims falling to their lowest level since July. A separate report on September job cuts has not yet been released.
Federal Reserve Vice Chair Philip Jefferson said the central bank remains fully committed to returning inflation to its 2% target and that future rate decisions will be driven by data. He said the Fed may take more time before its next move, arguing that waiting for more data will allow a better call.
The comments echo what Jefferson said a day earlier, when he also flagged that policymakers may need more time before deciding their next move. They reinforce the hold signal markets have already read into that earlier remark.
The data behind that caution has been mixed. US payrolls grew 90,000 in September, beating a forecast of 38,000 and topping August's gain of 75,000. Second-quarter core PCE inflation came in at 0.3%, far below the 3.6% expected and revised down from an initial reading of 3.3%. Traders trimmed their October rate-hike bets after that softer PCE print, and odds of an October move have since fallen to 50-50 from 70% following a "no urgency" comment from Williams. The dollar has strengthened on those remarks, pushing the euro down to $1.1312, its weakest level since May 2025.
Long-dated Treasury yields and mortgage rates have already priced in a firmer rate path. The 30-year fixed mortgage rate has climbed to 7.3%, its highest since November 2023, and mortgage applications fell 6.0% in the week ended September 25, a steeper drop than the previous week's 1.5% decline.
Jefferson's remarks keep alive a split at the Fed. Hawkish officials including Michael Barr and Austan Goolsbee have argued the central bank should tolerate market pain to hit its 2% target, while traders have swung from pricing three hikes to an even split on October action. With long-term borrowing costs already reflecting a firmer path, the next inflation or employment report looks likely to decide which view wins out.